Summary: Immune complexes (ICs) modulate antigen driven immune responses in part by their ability to inhibit interferong (IFNg) - inducible activation of inflammatory cells. Many genes, including MHC class II antigens, transcriptionally activated by IFNg require the tyrosine phosphorylation of the transcription factor p91 (Stat1). We have previously shown that this IC-mediated modulation of the IFNg response was due to the inhibition of p91 phosphorylation and the concomitant inhibition of nuclear transcription. Our current studies are extending these initial reports by demonstrating the role of ICs in downregulating the phosphorylation state of the kinases JAK1 and JAK2, as well as the a and b components of the IFNg receptor. The mechanism of this down-regulation appears to involve the recruitment of the phosphatase SHP-1, specifically through the FcgRI signalling pathway. These data elucidate the signalling pathway by which ICs may exert some of their immunomodulatory effects on inflammatory cells, and identify a target for pharmaceutical intervention to prevent these effects.